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Practical Income Manual 2021.

6.1 Tax regime for benefits received and early disposal of consolidated rights

a. Tax regime for benefits received

The benefits received for the contingencies covered by the pension plans (article 8.6 of the consolidated text of the Law regulating Pension Plans and Funds, approved by Royal Legislative Decree 1/2002, of November 29) will be taxed in their entirety. as work income without under any circumstances being able to be reduced by the amounts corresponding to the excess contributions.

Regarding the benefits received, take into account the possible application of the transitional regime of reductions applicable to benefits received in the form of capital from social security systems and that derive from contingencies that occur in the years 2012 or later, for the part corresponding to contributions made until December 31, 2006, which is discussed in Chapter 3.

In the event that the benefit is received in the form of an insured annuity, reversal mechanisms or certain benefit periods or counterinsurance formulas may be established in the event of death once the annuity has been established.

Remember: In accordance with article 8.6 of the consolidated text of the Law regulating Pension Plans and Funds, approved by Royal Legislative Decree 1/2002, of November 29, the contingencies for which benefits will be satisfied are:

  • Retirement.
  • Total and permanent work incapacity for the usual profession or absolute and permanent for all work, and severe disability, determined in accordance with the corresponding Social Security Regime.
  • Death of the participant or beneficiary, which may generate the right to benefits for widowhood, orphanhood or in favor of other heirs or designated persons.

  • Severe dependency or great dependency of the participant, regulated in Law 39/2006, of December 14, on the promotion of personal autonomy and care for people in a situation of dependency.

b. Advance disposal of consolidated rights

  • In general

    The consolidated rights of the participants, mutual members or insured of pension plans, insured pension plans, corporate social welfare plans and social welfare mutual societies can only be made effective in advance in the cases provided for in article 8.8 of the aforementioned consolidated text of the Law for the Regulation of Pension Plans and Funds approved by Royal Legislative Decree 1/2002, of November 29, which are long-term unemployment, serious illness and from 2025 for contributions and business contributions made with at least 10 years of antiquity.

    In the event that the participant, mutual member or insured had, totally or partially, the consolidated rights, as well as the economic rights derived from the social security systems, in cases other than of those provided for in the regulations on pension plans and funds that we have indicated , must replace the reductions in the tax base improperly carried out through the appropriate complementary self-assessments, including late payment interest.

    These complementary self-assessments must be submitted within the period between the date of the advance withdrawal and the end of the regulatory deadline for submitting the declaration corresponding to the tax period in which the advance withdrawal is made.

    In this case, the amounts received that exceed the amount of the contributions made, including, where applicable, the contributions imputed by the promoter, will be taxed as work income in the tax period in which they are received.

    Exceptionally

    However, in order to facilitate those affected by the volcanic eruption on the island of La Palma to meet unexpected liquidity needs, article 11 of Royal Decree-Law 20/2021, of October 5, which adopt urgent support measures to repair the damage caused by the volcanic eruptions and for the economic and social reconstruction of the island of La Palma ( BOE of 6), has established in all these cases, on an exceptional basis and exclusively during the period between October 6, 2021 and July 5, 2022 , the possibility that participants in pension plans, as well as insured persons of insured pension plans and corporate social welfare plans and mutual members of social welfare mutual societies can dispose of their economic rights in advance in certain cases and setting a maximum withdrawal amount.

    Conditions

    1. When they are owners of agricultural, forestry or livestock farms, commercial, industrial and service establishments, work premises and similar, located in the geographical scope of application of Royal Decree-Law 20/2021, of October 5, by which adopt urgent support measures for the repair of damage caused by volcanic eruptions and for the economic and social reconstruction of the island of La Palma, and which have suffered damage as a direct consequence of the recorded volcanic eruption;

    2. When they are self-employed workers who are forced to suspend or cease their activity as a direct consequence of the recorded volcanic eruption;

    3. In the case of workers affected by the temporary employment regulation files (ERTE) provided for in the fifth Additional Provision of Royal Decree-Law 18/2021, of September 28, on urgent measures for the protection of employment, economic recovery and the improvement of the labor market;

    4. In the event of loss of the habitual residence, when it is located in the geographical scope of application of Royal Decree-Law 20/2021, of October 5, by which urgent support measures are adopted for the repair of the damages caused by volcanic eruptions and for the economic and social reconstruction of the island of La Palma and has suffered damage as a direct consequence of the registered volcanic eruption.

    Note: In the case of social security mutual societies that act as an alternative system to registration in the Special Social Security Regime for Self-Employed or Self-Employed Workers, rights cannot be made effective economics of the products or insurance used to fulfill said alternative function.

    Maximum drawdown amount

    The maximum drawdown limit per participant, insured or mutual member, for the set of pension plans, insured pension plans, corporate social welfare plans and social welfare mutual societies of which they are the holder and for all the indicated situations, will be the result of prorate the annual Multiple Effects Public Income Indicator (IPREM) for 12 payments in force for the year 2021 (amounting to 6,778.80 euros) multiplied by three for a maximum period of six months computed from October 6, 2021.

    Therefore, (6,778.80 euros x 3) ÷ 12 x 6 = 10,168.2

    Refund of consolidated duties 

    The reimbursement of consolidated rights will be subject to the tax regime established for pension plan benefits, that is, they are taxed as income from work and attributed to the year in which they are received.